- The international reserves of BNM had amounted to USD126.6bil as at mid-November (or -1.2% from end-October). In Ringgit terms, the reserves at BNM declined by 1.2% to RM414.5bil.

- The reserves position is sufficient to finance 8.7 months of retained imports and is 1.1 times the short-term external debt.

- The forex support by BNM during 1H of November was to ensure that the Ringgit fluctuates in an orderly manner. Overall, we observe the upside catalysts for the strengthening of the Ringgit remain limited at this juncture.

- The Greenback strengthened against major currencies in recent months. At the close of 14 November, the Bloomberg US Dollar Index stood at 1,092.7 points or +1.1% from end-October.

- Bloomberg US Dollar Index is a gauge of the greenback’s value against 10 major currencies weighted by liquidity and trade flows. These major currencies include EUR, JPY, CAD, MXN, KRW, GBP, AUD, CNF, CNH, and BRL.

- Our year-end target for the Ringgit is RM3.35 per USD for 2014. For 2015, we expect the Ringgit to trade at an average of RM3.30 per USD, while our year-end target is RM3.25 per USD.

- Statistical release by the US Treasury Department showed a record inflow of long-term portfolio investments into the US in September. Foreign buyers accumulated corporate debt, Treasuries and agency securities during the month.

- Foreigners bought a net USD164.3bil in long-term financial assets, which suggest that the US is luring investors with economic growth that has outpaced other developed nations (August: USD52.1bil).

- Close to half of the inflows came from private foreign investors, who were net purchasers of USD80.5bil in Treasuries, agencies, corporate debt and stocks during the month. That was the biggest gain since August 2010.

- Also, government investors were net purchasers of USD13.7bil in US securities in September, which was a three-month high.

- The inflows were also boosted by US residents’ selling a record net USD70.1bil in foreign bonds and stocks in September (August: USD25.5bil).

- Meanwhile, foreign net buying of agency debt was USD21bil, the most since July 2013. Net purchases of corporate bonds were the highest in at least three years, which amounted to USD20.7bil in September.

- Aside from that, buying of Treasury bonds and notes in September had amounted to USD48.1bil, the most since February.

- However, China had reduced their stockpiles in September by USD3.4bil MoM to USD1.27tril, while Japan’s holdings fell by USD9bil MoM to USD1.22tril. Note that China and Japan are two largest foreign holders of US Treasuries.

Source: AmeSecurities